What to Expect, and Who the Winners Will Be
At the end of every year, I like to reflect on the trends in supply chain that are moving us forward as an industry and make some predictions on what will move the needle the following year. (Read my 2018 & 2019 thoughts here).
We’ve heard it countless times this year — 2020 was “unprecedented,” filled with “uncertain” times, “unexpected” challenges, and “new normals.” We never even knew how “essential” each of our roles was until Covid told us.
We certainly know this to be true. These words characterize the year, and we might soon find the history books using these buzz words to describe 2020. Together, we pulled off a fantastic year, and I’ve never been more proud of my team, our industry, and all of my freight friends around the world.
For many, it was a year of tough personal challenges. For the industry, it was a year of many adaptations. We saw changes in demand, changes in resources, and changes in the direction we’re taking our technology and innovation. While 2020 was the year of Covid, 2021 brings new hope for Logistics Technology firms who endured this year’s hardships.
Marketplaces boomed in 2020, sparked by the changes brought about by COVID, while Digital Freight Brokers opened their kimonos a bit by extending their platforms and service offerings outside of their walls. Ocean freight data and visibility companies took off, and freight FinTech became a thing — Here are four areas to watch for progress in supply chain tech in 2021.
Transportation Marketplaces — we’re never going back
Out of social distancing requirements, often leading to work-from-home arrangements, came new needs spread across the entire industry. Many companies had to quickly adapt at the start of the pandemic, building the necessary IT infrastructure and security, leaning on systems to replace in-person communication, and creating new processes. The resulting demand has helped advance innovation in some areas of logistics faster than where we might be without COVID-19. “We saw a massive uptick in both supply and demand through the pandemic. From the initial interest from BCOs during quarantine to new carriers and partners applying for access to our shipper’s freight during reopening and replenishment. Now, with this insane extended peak, we have been slammed. Shippers and carriers are interested in lower touch, higher ROI opportunities. Cargomatic’s marketplace has been able to deliver these things for our stakeholders,” said Michael Neller, EVP of Partnerships at Cargomatic.
The need for shippers to digitize as their teams spread out and worked from home meant the need for software to help manage transportation procurement took a front seat. There were a few key objectives that fueled the migration from email and spreadsheets to marketplace enabled software.
The initial priority was minimizing contact during shipping. Contactless pickup and delivery help reduce the health and safety risk to teams at these facilities. While drivers remain in their cabs, they can check-in and handle all communication surrounding loading and unloading, a process that easily lends itself to electronic BOLs and other documents. When the necessity of contactless operations is gone, we will still see the benefits of this type of process.
Distributed teams exposed the need for real-time sharing and collaboration tools. Cloud-based solutions for operations, collaboration, and communication equipped team members to work from anywhere while having all data secure and backed up and reducing the need for paper. We have a greater need for VoIP calls or video conferencing. Bringing this infrastructure to day-to-day operations has helped open up its usage for a more connected business network.
Coming about from the digitization of operations is the logical next step of added value — visibility. It’s an area the supply chain industry has already been pursuing, and new systems and processes lend a hand. AI scanning of electronic documents makes for easy reporting and analysis, plus tracking and monitoring. With better visibility, companies can reduce risk and, in turn, costs by predicting disruptions and the effects. AI can even be used as a “control tower” to receive end-to-end data, make decisions, and learn to improve performance and efficiency.
Even once we’re past COVID-related accommodations, hopefully in 2021, these types of demands will continue to fuel the logistics industry. Innovation will continue, and we’ll develop better solutions to replace the ones adopted hurriedly in 2020. Either way, shippers and carriers who jumped into the marketplace space seem unlikely to go back to their old ways as Digital Freight Brokers are also extending themselves to shippers in new ways.
Overlap between Digital Freight Brokers and Digital Freight Marketplaces
Emerge is a digital freight marketplace focused on using advanced technology for procuring loads. Dynamic RFP helps shippers connect with a broader range of carriers and adjust for market fluctuations in price. Their most recent development is the Book It Now features, allowing carriers to book a load without time-consuming negotiations, instantly accepting a preset rate. Emerge’s suite also offers Spot Freight Management and a Light TMS. Brokers and carriers are welcome to participate in spot bids for Emerge shippers in addition to the trusted network each shipper brings to the marketplace with them. This means shippers, carriers, and brokers are all finding new, complementary opportunities inside of Emerge’s marketplace. Unlike some of their competitors, Emerge maintains its brokerage authority, making them a “managed marketplace”. This ensures Emerge’s ability to deliver satisfactory services to its shippers without giving loads back, critical to maintaining marketplace confidence. Emerge’s early traction and brilliant founding team positioned it for an astounding 20 million dollar series A funding round this year led by New Road Capital Partners.
Newtrul calls themselves Expedia.com for trucking, connecting shippers, brokers, and carriers. On the brokers’ side, Newtrul announced in December their working with McLeod and integrating their solution into McLeod’s PowerBroker. Brokers save time posting and booking loads, as the McLeod user can manage this without leaving their platform. Newtrul provides carriers with a metasearch engine and promises to be always free for carriers, funded only by completed bookings. Newtrul was not alone in their pursuit of TMS integrations as several digital brokers announced TMS integrations to increase their shipper demand by presenting rates natively in TMS applications. Convoy, UberFreight, and Schneider Logistics all announced similar partnerships with BlueYonder and others. The native positioning of a broker’s pricing inside the TMS widens the broker’s net for loads to book while also increasing the broker or marketplace’s mindshare with carriers. Newtrul was among the first Digital Freight Marketplaces to make inroads with the behemoth TMS players but will likely not be the last startup to do so as the incumbent technology providers broaden their offerings through similar partnerships.
Cargobase specializes in automated spot freight procurement. This Singapore-based company has been around since 2013 but hasn’t, since their start, seen growth like that reported in Q3 2020: YOY 273%. They call automation the equalizer in logistics, as their report reveals the top freight forwarders are now winning significantly fewer bids. Cargobase covers a full suite of solutions, from freight procurement to management, track and trace, business intelligence, and analytics.
International Ocean Freight Data and Visibility
Fourkites has been leaving its mark on supply chain visibility since its start in 2014. Now the largest platform in the industry for real-time visibility, predictive analytics, and dynamic management, FourKites reported significant growth in 2020, as the platform introduced over 100 value-adding features and enhancements for its shipping customers. From the demands of COVID, real-time visibility was brought to frontline workers, helping to improve safety and lower operating costs. In their ocean freight customer base by itself, Fourkites grew YOY 140% in 2020. Their International load volume growth of 200%, including a 400%+ increase in tracked loads in EMEA and 95%+ growth in LATAM. 2021 will almost surely be another massive year for Mathew Elenjickal and his team. The international development work in 2020 will most likely represent the majority of FourKites’ growth again in 2021.
Having received several notable awards in recent years, project44’s Advanced Visibility Platform (TM) continues to be a leader in global visibility, including ocean freight. Project44 provides the API integrations for real-time visibility within the supply chain. This year, they worked to improve carrier collaboration through a carrier-centric interface, facilitated better workflows pre-and post-shipment (such as digital document retrieval), and focused on leveraging multimodal data for predictive analytics. It’s been all about meeting the industry’s new demands for agility. In December of 2020, P44 announced a staggering $100M in Series D funding led by Insight Partners, 8VC, and other current investors. With this dry powder, expect Project44 to push further outside of the US into International visibility.
Vizion specializes in creating APIs for the tracking of international ocean freight. Their developers can take a new idea to use tracking for an improved ocean freight process and build that solution. It started with container tracking, expanding to BOL tracking soon, and they are pushing forward by working on their “EasyPost for Ocean Freight” platform.
2019 startup RPA Labs is making strides in bringing robotic process automation to logistics. RPA Lab’s software bots use AI to learn the workflow of users and create efficiency in previously-bottlenecked processes, such as email inquiries and data extraction from documents. Where an ocean freight quote inquiry could ordinarily take 48 hours to respond to, RPA Lab’s solution uses intelligence to derive a data-driven response within minutes.
OpenTrack is a growing API solution for ocean data visibility. By automating track-and-trace processes with exceptional accuracy, they offer dependability and efficiency with the Container Availability Manager. OpenTrack is also the top solution for rolled cargo alerts, detecting these faster than any other technology provider in the world. Founders Kevin Valsi and Martin Hendleman met while building the digital freight marketplace, Cargomatic. Their vision to automate manual tasks began while building Cargomatic and is now taking shape. The company has several blue-chip freight forwarders as early customers and is in talks with many more. “We knew from our time at Cargomatic that operators in logistics had a tough job. There were so many systems; the ops team was usually swiveling between multiple systems and screens. We knew we needed to be API first to meet the customers where they are, and we needed to build in execution from the get-go,” Valsi said.
OpenEnvoy, launched in late 2020, provides a simple solution to a common problem that’s either ignored or given an over-engineered, expensive solution: AP fraud. Their singular focus is invoice auditing, using their technology to audit every invoice cost-effectively, with an out-of-the-box solution rather than a financial product or consulting services. Any payment inaccuracies can be disputed by the payor, and the supplier can either justify or correct the mistake. Analytics and supplier management tools save OpenEnvoy’s customers money and time in the process. Founded by LogTech veteran Matt Tillman, OpenEnvoy was built out of necessity. “We created OpenEnvoy to address the fact that there wasn’t a fixed-cost, tech-first freight audit provider which provided white-glove service. OpenEnvoy was built out of a personal need, with each of the founding team members having been directly responsible for auditing billions of dollars in spend. The global pandemic created an acute awareness that finance departments lack the tools required to scale their operations, and invoices are an immediate opportunity to increase cash flows,” said Tillman.
Founded in 2018, BasicBlock was created out of the explosion of blockchain technology, applied toward helping truckers get paid faster and more cheaply. The workflow automation capabilities lead seamlessly into their same-day factoring services. By combining their document retrieval services and automated payments in one API, BasicBlock delivers a uniquely-efficient solution for fast and transparent payments. Covid brought about substantial growth for the company as contactless document retrieval skyrocketed during the quarantine. The need for cash flow for small trucking companies increased proportionally to the 30–35% increases we saw in trucking rates. “It’s the perfect storm for our business. As soon as fleets understood the risks drivers were taking by being on the road, they reached out in droves. Then, as rates continued to skyrocket, our factoring product took off. We launched our factoring beta in November and quickly hit 1M per month and we’re nowhere near slowing down,” said Taylor Monks, Founder, and CEO of BasicBlock. BasicBlock closed a seed round of funding during the onset of the pandemic and has since grown its service offering from document scanning to no offering payments, fuel cards and will offer truck insurance very soon.
PayCargo is a commercial payment system with a growing customer base, as more vendors — in all modes of transportation — continue to join their payment network. They offer secure, automated payment processes with the same-day release, helping companies lower operating costs and increase their cash flow. Carrier payments can be completed within an hour without the cost or hassle of using checks or wires. In September, PayCargo received a $35 million series A investment led by Insight Partners to further its growth and expansion efforts.
While there was no way for any of us to predict the exact happenings in 2020, we can all agree that our world is ready for 2021 and the hope that a new year brings with it. My greatest hope for our industry this year is that we all learn from the adversity we were faced with in 2020, and we don’t give up on the positive momentum we have gained in the area of supply chain innovation.
Written by Charley Dehoney. Charley has been a successful executive and entrepreneur at multiple logistics and technology companies, most recently at Manning’s Truck Brokerage (sold to FitzMark). Charley has spent nearly two decades building businesses in supply chain.